Markets Overview: (Source: Bloomberg, FT, Reuters, DJ Newswires)

UK 100 called to open -35pts at 6660, after losses in both the US and Asia, on fears that a tech bubble may be brewing following the strong debut by Twitter (TWTR) as well as the strong US GDP figure meaning the US Federal Reserve may taper earlier than March 2014 and agency S&P cut France this morning to AA from AA+, although it upgraded its outlook to stable from negative – another blow to the EUR after the ECB rate cut yesterday.

There are, however, questions about US inventory builds making up for the Q3 GDP beat, and mean-reversion in Q4, a quarter affected by the October US government shutdown, meaning a weak year-end and need for the Fed to maintain stimulus well into 2014.

Markets also cautions ahead of the update on US jobs situation which is seen being impacted by the government shutdown, being weaker than last month and below trend, also seeing the Fed need to hold off from making any bold decision on stimulus reduction.

Investors not soothed by a better (although notoriously volatile) Chinese Trade Balance overnight, with it doubling thanks to a strong rebound in Exports and imports solid, although highlight exports’ importance ahead of the major political party meeting which may focus on how to boost domestic growth to reduce the reliance after several decades.

In other news, the RBA cuts its GDP forecasts in its quarterly forecasts and kept the door open for another rate cut to avoid deflation. AUD/USD holding 0.94. The ECB rate cut and promise of other measures is necessary, all in response to dis-inflation (too late?) and faltering growth continues to weigh on EUR/USD although it is holding 1.34, bar a minor blip after French downgrade.

In focus today we have Merlin Entertainments IPO, then we move on to UK Construction output seen rebounding in September. In the afternoon the data-watching continues with all eyes on the US for its latest jobs report where the US government shutdown is seen as hindering progress. Uni of Michigan Consumer Confidence closes the weak with an expected improvement in November.

UK 100 made major breakdown below 6700 support to test the next level at 6660. What is unclear ahead of some key US data is whether 6660 is a half-way house for a decline to 6585 or whether resilience can kick in to take the market back to the levels from whence it came.

In FX, USD basket back off 81.0, this after a volatile day (80.6-81.6) yesterday as EUR flew about. Beware taper fears and key US data this afternoon. GBP/USD flat around 1.61. EUR/USD holding 1.34 after the sell-off from 1.35 to 1.33 yesterday). Recovery based on relative strength of EUR vs. USD on fears of Fed tapering hitting the USD.

Gold testes $1300 but back around $1310 after decline in USD. Falling multi-month resistance at $1350 remains a significant hurdle. Any data which leads to raised expectations of tapering could see USD rise and Gold falter today and make another test of $1300.

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MERLIN ENTERTAINMENTS – IPO TODAY